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Mr. Peter Bradley (The Wrekin): Is not one of the reasons for the number of confused people--especially pensioners and other vulnerable individuals, and especially in the south-west--the fact that both the Liberal Democrats and the Conservatives have pursued a scurrilous scaremongering campaign in regard to the proposals for the Post Office? Will my right hon. Friend join me in asking them to support the Government's effort to convey the correct information to pensioners, so that they can feel secure about their future?
Mr. Rooker: The issue of choice is important. We recently provided all sub-postmasters with two leaflets explaining the system of payments of benefits and pensions, entitled "You Have A Choice", in letters an inch high--I am old-fashioned; I was brought up on "tenths of a thou" in the factories where I worked. Some sub-postmasters, however, refuse to display the leaflets that explain that pensions can be paid through the bank or by them, across the counter. We must have a mature and adult debate about this, because there is a serious issue at stake, affecting both the future of the post office network and the choice that people have.
My right hon. Friend the Member for Birkenhead (Mr. Field) may remember, as I do, the last big rally and lobby of the House by the National Federation of Sub-Postmasters, in about 1981 in Westminster Hall. Most hon. Members who are present now probably were
not here then. I was an Opposition Front Bencher at the time. There may have been a few such rallies since, but the problems that were raised then--
Mr. Archy Kirkwood (Roxburgh and Berwickshire):
You were fomenting them.
My noble Friend Lord Orme and I were in Westminster Hall. I had never experienced a lobby or rally like it. I can honestly say that I have not experienced one like it since, so I am well aware of the--
Mr. Kirkwood:
Newcastle will not be far enough away.
Mr. Rooker:
My diary had me on ministerial business in Newcastle on 12 April, but I have insisted on being at the rally in London. I will have my own constituents coming to see me on that day. It is important to be in London.
There is an important issue to be dealt with, which has been touched on by hon. Members on both sides of the House. We must take it on board.
Mr. Kirkwood:
Will the Minister give way?
Mr. Rooker:
I shall make a little progress and then I should be happy to give way.
New clause 26 is designed to retain people's current choice as to method of payment--it applies to the year after, really, irrespective of circumstances. We have announced that automatic credit transfer will be the norm for paying benefits from 2003. I cannot say in March 2000 what the rules and procedures will be. It is not possible. It will probably take the best part of the rest of this year before the negotiations are completed--they may go a little into next year--between the Benefits Agency and the Post Office, and between the Department of Trade and Industry and the Post Office.
There is much detail to go into, some of which I have alluded to. For example, we pay 1 million emergency payments a year. Emergency payments are emergency payments; the cash is needed. It may not be possible for ACT to be even a runner for such payments. That must be taken account of.
Some people will never be able to have, or to run, a bank account. The figure is a lot smaller than the percentage of people who do not have a bank account now, but some people are not allowed by law to operate a bank account. Clearly, we must take all that into account before we make those changes.
Mr. Pickles:
Could the right hon. Gentleman help us? He says that he is in negotiation on this issue. Given that it is cross-departmental, is he doing the negotiation, or is the Department for Education and Employment doing it?
Mr. Rooker:
No. The Department of Trade and Industry is the sponsoring Department for the Post Office. It is leading on the Horizon project. A departmental issue
The transfer to ACT is planned to begin in 2003 and to be completed by 2005. However, those who wish to continue to collect their cash at post offices will still be able to do so before and after the change in 2003.
Mr. Nicholls:
Whether or not they have a bank account of their own?
Mr. Rooker:
I emphasise: those who wish to collect their cash at post offices will still be able to do so before and after the change in 2003. At present, until the cash in the post office crosses the counter, it is, in effect, the Secretary of State's cash. With ACT, the bank has the cash the minute that it is transferred to the person's account, so it is their cash.
Mrs. Jacqui Lait (Beckenham):
Taxpayers' cash.
Mr. Rooker:
No. It is legal terminology. The money that would be accessed via a post office is already the cash--
Mr. Rooker:
No. It is already the cash of the beneficiary--it is already in the beneficiary's account. It is no longer in the Secretary of State's account, it is no longer in the Benefits Agency and it does not belong to the Post Office. The cash is already in the account of the payee: the pensioner, the child benefit recipient, the mother. That is the point I am making. It will be the payee's cash. At present, the cash at the post office remains the Benefits Agency's cash until it is transferred.
Mr. Kirkwood:
The Minister is trying to be helpful and I am sure that the House is grateful for that. In my understanding, the key piece of law that underpins all this--never mind the leaflets, the wording, the jargon and whether leaflets are being displayed--is the Social Security (Claims and Payments) Regulations 1987; I think that it is regulation 21, from memory. That makes payment by ACT a consensual act. The claimant has to opt in and the Secretary of State has to comply. The moment that the Government repeal that regulation without guaranteeing the sub-post office network an alternative stream of income, they will kill off the sub-post offices. The Minister can say that there will be arrangements and I understand that there will be negotiations. I hope that he will listen carefully to the representations that are being made, but he must be certain that the repeal of that legislation will potentially sound the death knell of the post office network.
Mr. Rooker:
As the hon. Gentleman says, we must be very careful about how we implement the changes. We have to be sure that the system will work and that people will be able to get the money to which they have a right and which the House instructs the Government to pay. We are unable to make proposals for changing primary legislation and regulations because we do not have answers to all the questions. We need those answers before the changeover.
Mr. Nicholls:
Will the Minister give way?
Mr. Rooker:
Let me make some progress before I give way again.
Let me remind hon. Members why the changes are necessary. The current system belongs to the days of ration books. The technology has hardly changed at all. The Department has to look at the best use of taxpayers' money. We spend £2 billion a week--or £100 billion a year--on issuing benefits. The running costs amount to some £3.5 billion a year. An ACT costs 1p in transaction costs compared with 49p for an order book foil and 79p per giro cashed. The overall costs to the Department are 1p per ACT, 54p for an order book transaction and £1.36 for a giro. Those costs include the paperwork, the production and the printing. The transaction costs vary slightly, but giros are more costly. We have to take that big jump into consideration. In addition, we estimate--we can only estimate--that we lose about £150 million a year in fraud such as counterfeiting and forgeries. I am not saying that there is not, and will not be, any fraud in ACT; it is fraud of a different nature. Obviously, we would have to adjust the anti-fraud programme to make sure that we do not lose what we have gained.
Mrs. Gwyneth Dunwoody (Crewe and Nantwich):
Are not the pensioners who want to receive their cash over the post office counter the same people who have contributed over the years to the creation of my right hon. Friend's Department? Might they not find his arguments about the cost of each transfer singularly unconvincing when they are faced with the difficulty of either having to run bank accounts that they are unable to maintain or being required to use an artificial machine to obtain their cash?
Mr. Rooker:
I could argue that all machines are artificial. I was simply explaining the costs to the Department. We do not know what sub-postmasters receive; that is commercially confidential information between themselves and the Post Office. We pay an annual fee to Post Office Counters of some £400 million to £500 million. How it pays sub-postmasters is a matter for the Post Office.
What is happening now is unplanned and unmanaged. More people are choosing to use the banking system in an unplanned and unmanaged way.
When I was at that rally, in 1981, there were 22,000 sub-post offices. That figure stuck in my mind. We have fewer than that number now--but more than 18,000--and we have heard the figures on the losses. They are all independent private sector businesses. As I understand it, they are all also on a three-month contract. They could all disappear. The Government do not run them or own them. They are operated by individual business people, doing a first-class job. Some of them are more dependent than others on what they receive for benefits transactions.
If nothing happens--if no action is taken at central level by the Government and by the Post Office headquarters, and if the current changes continue--in a few years, we could lose the post office network. That change would have been unplanned and unmanaged, and every hon. Member would ask, "How on earth did it happen? Why didn't we do something about it?" The very purpose of our change is to provide planning and management. We want a transfer to ACT that will in turn protect the post office network. The Government are determined to help maintain a post office network.
My hon. Friend the Member for Stroud (Mr. Drew) mentioned work being done across government. The transfer is not being dealt with or led by the Department
of Social Security or by the Department of Trade and Industry. As was mentioned earlier in the debate, the Prime Minister asked the performance and innovation unit to do work on the post office network. It has been doing that work since October 1999, and it will report fairly soon. That important work is being chaired by an independent Minister who has no role at either the DTI or the DSS. We should take that important fact on board.
The Government want to retain a post office network, which is crucial in rural areas. I take second place to no one in making the important point about the contribution of the rural post office in villages that have been deserted by the banks. The network is crucial. A post office may not always be in the right location to ensure its economic viability, but that is a consequence of the current lack of planning. We certainly want to be able to provide that planning.
We have to have a more modern system and to bring both the Post Office and the benefits system into the 21st century. They are certainly not there yet. The way in which we pay benefits, with orders books and old-fashioned giros, and the way in which the Post Office has been operating have not been consistent with a modern service delivery programme. There is no question about that. However, what we do not want to do is to lose post offices by accident--by lack of management and lack of foresight.
10.45 pm
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